While keeping the repo rate at 8.25%, the Reserve Bank has struck a hawkish tone after October’s consumer inflation surprised to the upside.
Making the announcement on Thursday, bank governor Lesetja Kganyago highlighted the risks associated with inflation, which has been sticky recently, after the reading for last month came in at 5.9%, from an expected 5.6%.
He also said while load-shedding had eased, it would still have an effect on the economy with “domestic growth likely to remain muted”.
October’s inflation reading marked the third month running of inflation acceleration after it reached a recent trough of 4.7% in July.
The bank targets inflation of 3%-6% but prefers to have the rate anchored at the midpoint of that range.
MPC keeps repo rate steady at 8.25% but warns of risks ahead
While load-shedding has eased it still remains a threat to economic growth
Image: Freddy Mavunda
While keeping the repo rate at 8.25%, the Reserve Bank has struck a hawkish tone after October’s consumer inflation surprised to the upside.
Making the announcement on Thursday, bank governor Lesetja Kganyago highlighted the risks associated with inflation, which has been sticky recently, after the reading for last month came in at 5.9%, from an expected 5.6%.
He also said while load-shedding had eased, it would still have an effect on the economy with “domestic growth likely to remain muted”.
October’s inflation reading marked the third month running of inflation acceleration after it reached a recent trough of 4.7% in July.
The bank targets inflation of 3%-6% but prefers to have the rate anchored at the midpoint of that range.
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The bank lowered its inflation forecast for 2023 to 5.8% from 5.9% at its September meeting. It now expects an average of 5% next year, from 5.1% previously, while the forecast for 2025 remains 4.5%.
Just before Thursday’s announcement, the rand was 0.4% firmer at R18.77/$. Soon after, however, it had pulled back to be flat at R18.84.
While Kganyago said logistical constraints in port and rail services are likely to “have broader effects on the cost of doing business and the cost of living”, the bank raised its economic growth forecast marginally to 0.8% for 2023 from 0.7% in September.
It also increased the forecasts by 20 basis points to 1.2% and 1.3% in 2024 and 2025.
BusinessLIVE
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